It's not that China isn't an important cog in the global economy, but the tendency for major media outlets to focus on it as some sort of central market mover is hopelessly overblown at best.  As you may have seen (or as you may have deduced from what I'm writing right now), there's more than a little bit of this overfocus on China in the news this morning.  The easiest way to address this is probably with a chart that shows just how much US markets don't give a damn.

2014-12-9 china

Gosh... Ya'd think if the 5% drop in Chinese stocks today is being credited for a bond market rally that the 23+% improvement since mid-November would have resulted in something other than a bond market rally.  Do we really care about whatever happened in that tiny white circle in the chart above considering everything that came before?  No... markets didn't care then, and they don't care now.  Food for thought: in the time that it took for the Shanghai Composite to fall 5% today, S&P futures moved from 2055 to 2054.75.  10yr yields moved from 2.266 to 2.264. 

European markets have been far more relevant as German Bunds made another all-time low today.  THAT'S significant.  Most everything else is not.  A close second is the "stock lever" as US and EU equities prices did a solid job of tracking with bond yields through the EU equities closing bell.  This isn't up for discussion or debate.  It's simply fact.  Feel free to print out the following chart and tape it to the forehead of anyone droning on and on about China today.  But first, let them know that it shows the DAX and 10yr yields tracking PERFECTLY through the European stock close, at which point US markets begin to do more of their own thing.

2014-12-9 reality

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
100-31 : +0-05
FNMA 3.5
104-08 : +0-04
FNMA 4.0
106-26 : +0-01
2 YR
0.6160 : -0.0160
10 YR
2.2080 : -0.0510
30 YR
2.8590 : -0.0460
Pricing as of 12/9/14 1:01PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
9:09AM  :  Bond Markets Hold Overnight; Improving Now as Stocks Slide

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "there's also no FedTrade operation today (where the Fed reinvests their MBS-related income on a scheduled basis)"
Victor Burek  :  "during sell offs, mbs sell off less, during rallies, they rally less"
Paul Martin  :  "MBS underperforming?"
Chris Hooker  :  "Why no love for MBS?"
Matthew Graham  :  "Greece is getting an inordinate amount of attention this AM, because they're making the biggest waves, but I'm not really seeing much of that translate to broader markets. The stock lever, on the other hand, has been as well-connected as we've seen it in days--even weeks. I read about that possibility somewhere."
Gus Floropoulos  :  "down 10 bps on 10 year from y'day. Quite the move down considering Fridays # and lack of any real data y'day. Stock/Commodities lever & Eurozone the main catalyst?"
Matthew Graham  :  "He had to write something. If you haven't noticed the massive curve flattening recently (2s and 3s getting hit hard relative to 10's and 30s), markets are already adjusting for accelerated rate hike perceptions."
Hugh W. Page  :  "Fed likes to experiment and "tinker" with things so they might just experiment with raising the policy rate sooner than we think. Hilsenrath article this morning in WSJ on debate in Fed right now about removing the "considerable time" phrase."
Christopher Stevens  :  "Depending on what the change is I think mrkts are anticipating a mid year rate hike. 2yr treasuries are moving up at a quick pace last few weeks and that to me shows traders are starting to think rates will rise sooner than later. "
Sung Kim  :  "removal of verbiage next week? "
Christopher Stevens  :  "SK I think the Hilsenrath article is just repeating what the markets already are assuming. "
Sung Kim  :  "sheesh, i figured the hilsenrath article would have crushed us today"